ironpants

Fixing the Economic Crisis in Six Easy Steps

Pt 1 - how original.

Want to fix the mess?...

From Motley Fool:

Specific Changes Needed to Fix the Financial Markets and the Economy

The following policy and regulatory changes that Christopher Cox, the SEC, and other regulatory agencies made and implemented from 2004 through 2007 need to be reversed after January 20th, 2009 or immediately. These policy and regulatory changes have destroyed the integrity and reliability of and confidence in our financial markets. The money sitting on the sidelines (approximately $13 trillion) in Money Market and Cash Accounts will not be re-invested back into the markets until these changes have been reversed and the proposed changes below implemented. I am recommending that all of the following policy and regulatory changes be made and implemented immediately by the new Administration:

1. The "Uptick Rule" on all securities (i.e., equities, ETFs, options, futures, and commodities) needs to be reinstated and implemented on all domestic and global exchanges and financial markets. Without the “Uptick Rule” in place, it creates an unfair and imbalanced playing field that favors the short sellers. This gives short sellers the ability to drive stock prices down to nothing. The exchanges are just as guilty and responsible for this problem as all others. The markets/exchanges were not meant to be casinos. New laws, oversight, regulation, and technology needs to be implemented and changed in order to solve these serious problems and abuses and restore integrity and order back to the markets. Get the "Uptick Rule" back in place and the markets will stop crashing. This one item is destroying good, healthy corporations.

2. The new SEC Chairwoman, Mary Schapiro needs to dump or get rid of the Mark-to-market accounting rule now. At the worst possible moment we as a nation chose to alter the way financial assets were evaluated -- through something called FAS 157. We required financial institutions to mark holdings to forced trades in illiquid assets -- mark-to-market accounting. The most powerful critic of this approach was William Isaac, the former head of the FDIC. His viewpoint is that the entire financial crisis -- the destruction of major financial firms, the huge bailouts, the destruction of retirement accounts, and the socialization of private companies -- all could have been avoided with a more measured approach to the needed reduction in leverage. This rule could have been changed by Christopher Cox, Hank Paulson, Ben Bernanke, or even by the president.

3. The SEC under Christopher Cox’s tenure and the exchanges relaxed the dynamic circuit breaker thresholds on all major securities, options, and futures exchanges to levels that are too high and therefore ineffective under current market conditions and volatility levels. The current three dynamic circuit breaker thresholds of Level One (10%), Level Two (20%), and Level Three (30%) should be reversed and reset back to the previous circuit breaker thresholds of Level One (2.5%), Level Two (5%), and Level Three (10%) for all exchanges and markets.

4. All ETFs should have the same SEC/FINRA/CFTC/NYSE/NA... reporting, filing, and regulatory requirements as Mutual Funds. ETFs will need to comply with all of the Rules and Regulations of the Investment Company Act(s) of 1933, 1940, and all their later amendments.

5. All ETFs should be converted back to Closed-End Funds. This means that you can no longer buy/sell/write options, derivatives, and/or short sales on ETFs.

6. All Ultra Short ETFs should be abolished or banned. These products do not perform as specified and their claims are fraudulent. They promote negative price fluctuations and volatility on the underlying securities and indices and perpetuate a disorderly and unreliable marketplace.